I'm in the US and gratefully have access to both.
I can't get over the community aspect of Last.fm; and Scrobbling is something that I've had turned on for soooo long--I am my Last.fm. I switched to Pandora for a bit and thought I like it a bunch, the UI is sooo clunky--old, stale Flash.
I've been back with Last.fm for quite a while now and l-o-v-e it.
I have no choice but to choose last.fm as it is the only one of the two which is available here is Australia.
First, I should note that I live in the United States, where both services are available. Despite the fact that my corporate firewall currently blocks last.fm, and despite the fact that the free version of Pandora allows multiple stations while the free version of last.fm only allows one, I find myself continuing to gravitate to last.fm. The primary reason, other than Pandora's 40-hour limit, is probably last.fm's ability to record and share every song that you listen to, allowing the recently played tracks to be aggregated in places such as FriendFeed's "lastfmfeeds" room. In addition, last.fm sometimes allows limited listening of a particular song, while Pandora offers no such capability.
I used Pandora for awhile. I would listen to it while I was doing homework. After 40 hours of listening to it, through out the month. Pandora wouldn't allow me to listen anymore without subcribing. I than found out that last.fm was coming out on Xbox Live so I figured that I would see what last.fm was like. Ever since I tried them I haven't gone back.